Treating People as an Asset

About the Author

a 367 July 13, 1984 TREATING PEOPLE AS AN ASSET INTRODUCTION
Nations Fund for Population Activities at a cost of millions of
dollars--much of it coming from U.S. taxpayers--convenes in Mexico
City, August 2-

6. Despite the rapidly approaching date neither the U.S.
delegation nor the U.S. strategy has been selected.

The cause of this inaction is the rag.ing controversy about
issues that will be addressed at the Conference. On one side are
the right-to-life groups who are against abortion, members of
Congress and the Administration (including apparently President
Reag a n) who worry about government interference in family life
and certain experts who have pointed out that the pessimistic
Malthusian view of the world is unfounded and wrong The World
Population Conference, sponsored by the United On the other side is
the I l population lobby composed of environmental and zero-growth
organizations who worry about the effect of more people upon
resources and the environment) and the State Department and Agency
for International Development, which long have insisted that
populat i on growth reduces economic growth and increases political
instability. These are the 'IMalthusians,l1 those whose view of the
world assumes that the supply of physical factors is a key element
in production, is fixed in supply [e.g land] or diminishes wit h
exploitation [e.g an oil well rather than continually being
augmented, and where output per worker therefore, falls as
additional workers are added. This group has been joined by most
members of Congress and some members of the Administration onto the
tu r f where they are politically strongest: the matter of
prohibiting abortion. Just two sentences in a White House draft
position paper, prepared by the National Security Council The
population-control advocates have pulled the struggle i 2 at the
behest of t he anti-population-control side, deal with this topic.
These passages recommend a cut-off of funds to country programs
that promote abortion. While this is an important matter, it is
only one aspect of the White House draft. The bulk of the draft, in
fact , addresses the crucial issue of the relation ships between
population, economic growth, and economic systems It makes the
argument that should be at the center of the U.S delegation's
strategy in Mexico City--that in the long run a growing population
is b e neficial in an economic system that provides incentives for
enterprise THE NEED FOR A BALANCED U.S. DELEGATION tuted entirely
by those uncompromisingly in favor of population control. This
seems to be the wish of the population lobby and the State Departm
ent, and it was the case at the World Popula tion Conference in
Bucharest in 19

74. Or will the delegation be balanced to reflect the diversity
of American views on the ques tion? Not only would it be common
fairness for this .diversity to be represented, but it could head
off the sort of.resentment that was directed at the United States
for its aggressive anti-natalist position in Bucharest. Such a
catholic and tolerant policy could begin to win back friends that
the United States has lost on ac count of t he coercive,
U.S.-backed population-control programs A key question is whether
the U.S. delegation will be consti- in several countries, such as
India and 1ndonesia.l THE PRO-CONTROL VIEW The reasons given for
reducing population growth, according Populat i on grow th is
contributing to unusual economic social, and resource pressures
which threaten to under mine U.S. initiatives for peace, economic
progress, and human dignity and freedom in many areas throughout
the world. Intelligence analyses identify four destabilizing
aspects of population change and demographic pressures that can be
exploited by communism and extremist movements which breed on
frustrated aspirations a) Fast-growing youth populations b)
International migration Ex plosive growth of cities d ) Ethnic
tensions.2 Vincent Barabba, the U.S. representative to the
Population to a State Department draft statement, are Commission
planning the Mexico conference, earlier this year said The Agency
for International Development says that it no longer sup ports any
programs that are in any way coercive, though it does admit
previous involvement.

In the past, however, AID has said exactly the same thing.

State Department Draft U.S. Scope Paper on the Definitions of
Conference on Population," no date, pp. 2-3.

High population growth rates are undoubtedly hampering the
efforts of many countries to achieve their economic and social
goals, including basic elements of human life and dignity: adequate
food and water, health services education, shelter, and employ ment
continued high rates of population growth can slow the progress of
development efforts generally and exacerbate the forces that
sustain high infant and maternal mortality, the unmanageable
movements of people, the deterioration of family struc ture, and
the many other population problems whose solu tions we seek.3 But
these assertions simply are not supported by the facts.

POLITICAL DESTABILIZATION The Weakness of the Political Argument
It is a truism for many people in and out of the government that
population growth has an unsettling effect, especially in poor
countries. For example, in the March 19, 1984, Wall Street Journal
Karen Elliott House and Steve Frazier wrote about the purported
effects of rapid population growth and migration to the citie s as
follows Though migration to the cities is the pattern all across
the Third World, from Jakarta to Lagos, from Bombay to Caracas,
nowhere is the problem more immediately threaten ing to U.S.
interests than in Mexico City. These people form a pool of ur ban
unemployment that could undermine political stability on America's
southern border.

And the State Department's pro-control draft asserts that
Fast-growing youth populations are growing faster than most
developing countries can absorb them..tincreasingl y frustrated and
angry, ready recruits for a cause, who have fueled unrest in Kenya,
India, Lebanon, the Philip pines, Iran and elsewhere International
migration creating growing political and social tensions in Africa
the Near East, Asia, and Central and South America Explosive growth
of cities The combination of over crowding, unmet expectations, and
different ethnic religious, and social groups makes a politically
vola tile mix. Violent demonstrations and mass riots over food or
sectarian causes in the r ecent past in cities as varied as Tunis,
Bombay, Sao Paulo, Cairo, Rabat Karachi, and Rio de Janeiro are
manifestations of these growing pressures Ethnic tensions potential
inter national conflicts over land, water, or resources, its
influence should not b e ignored Popline, January 1984, pp. 1, 4. 4
The body of scientific literature on the subject, however is thin
To the extent that there is systematic analysis, the conclusion
seem to be that there is no connection between popula tion growth
and war--or ot her political instability--due to the struggle for
economic resources.

Quincy Wright.

Sciences, Wright argued The greatest inquiry ever into the
causes of war was that of In his short summary in the Encyclopedia
of Social Population pressure---has had lit tle influence in pro
ducing war unless accompanied by increased knowledge of economic
differentials and by inciting propaganda In sum, studies of both
the direct and indirect influence of economic factors on the
causation of war indicated that they have b e en much less
important than political ambitions, ideological convictions,
technological change legal claims, irrational psychological
complexes, igno rance, and unwillingness to maintain conditions of
peace in a changing world (pp 462-463 Nazli Choucri of the
Massachusetts Institute of Technology has completed some recent
work on the subject. She concludes that 11demographic8f factors
sometimes lead to conflict, violent and nonviolent. But the key
demographic factor is the relative increase in one ethnic g r oup
relative to another, rather than increase in population size or
population density per se. This can be seen most clearly by simply
listing the wars that she considers Ilarchetypical cases of
Ilpopulation dynamics and local conflict." These are: the Al g
erian War of Independence, 1954 1962; the Nigerian civil war; the
two wars involving Indonesia the conflict in Ceylon and El
Salvador-Honduras; and the Arab Israeli series of wars. None of
these would seem to be conflicts launched to obtain more land or m
ineral resources to increase the standard of living of the group
initiating the conflict.

To show that population growth causes conflict, it must be shown
that two neighboring countries or groups, both of which are growing
rapidly, are more likely to come into conflict than are two
neighboring countries or groups neither of which is growing
rapidly. This Choucri.has not shown-nor has anyone else. In
Choucrifs view, conflict could just as easily be caused by one
country or group reducing its growth rate rel ative to another
country or group as one increasing its relative growth rate.

And in fact, many have argued that it was just so in the case of
France and Germany, when France's birth rate was so low that it
induced the Franco-German wars political instabil ity is another of
those pervasive notions that everyone lfknowstl is true, which
seems perfectly logical, but has no factual basis in the empirical
evidence. There are many who will tend to disregard the empirical
evidence on the matter, as has been the c ase with the economics of
population and resources generally, on the grounds that the
Malthusian theory is com pellingly strong.

Only time can tell which leads to the correct forecast. Yet In
sum, the purported link between population growth and There is no
logical rebuttal to that position 5 historical evidence has been
unfavorable to those who maintained the Malthusian position.

Even if real conflicts over land for its economic output have
sometimes occurred in the past, such conflicts should become less
likely and may even disappear in the future. The reason is that
land progressively becomes less important relative to other
economic activity as countries develop.

The Weakness of the Economic Argument The economic justification
for the population-control line is straight out of Malthus, as
embodied in the Coale-Hoover study, which has provided the
rationale for the U.S. government population policy since the late
1 950s, as well as for The Limits to Growth project of the Club of
Rome and The Global 2000 Report to the President of 19

80. A good many lfintellectualslf in the poorer countries share
this point of view. But many leaders and much public opinion in
those sa me countries reject it, correctly believing it to be
mistaken scientifically and regarding it as imperialistic
interference by the U.S. The pro-control people will undoubtedly
try to be less abrasive in 1984 than they were in 1974 in
Bucharest, when the U . S. caused a storm of conflict by attempting
to impose a population-control viewpoint upon the Conference. But
they hold the Malthusian view so strongly that they are likely to
push it as far as they can. And in this they have the sympathy of
Rafael Salas, head of the United Nations Fund for Population
Activities, and Leon Tabah, the head of the U.N. Population
Division.

To be sure, in the short run, an additional person--baby or
immigrant--reduces the community's standard of living. This extra
consumer cau ses the temporarily fixed stock of goods to be divided
among more people. As Malthus argued, more workers laboring with
existing capital result in less output per worker.

If a family or nation decides that it wants not to have more
children because the sh ort-run burden outweighs the long-run
benefits, it can certainly make such a choice, subject to its own
values. But if they should decide not to have more children because
they think resources will be limited in the long run and therefore
"diminishing ret urns" must occur, this choice would be made in
error.

In the long-run, the story diverges from the short-run
Malthusian bind. For the richer countries during the past century
population growth has not shown a negative effect upon economic
growth, according to the data of Nobel prize-winning economist
Simon Kuznets. For example, though population has grown six times
faster in the United States than in France, the rate of increase in
output per person in the United States has been about the same as
in France , and the level reached has been higher in the U.S. Nor
do cross-national comparisons undertaken by Kuznets and others show
any negative effects. A World Bank study shows that income in the
poorer countries grew proportionally as fast or faster than it did
in the rich countries between 1950 and 1975 though population grew
much faster in the poorer c~untries These facts should be enough to
dispel the Malthusian myth even if they are not conclusive proof
that a larger population should be judged as beneficial in all
ways. i 6 The purported negative effect of additional people upon
natural resources, the bete noire of the environmentalists, .is
stated prominently in the State Department draft The current
situation of many developing countries, however, differs in certain
ways from conditions in 19th century Europe and the U.S.

The rates and dimensions are much higher now, the pressures on
land, water and resources are greater If Ilpressures are greater"
is to have any meaning, it must be that these resources are less
available now than earlier that the prices of food, metals, and
other raw materials have been declining by every measure-especially
relative to wages in the U.S. and even to consumer goods--since at
least the beginning of the 19th century. In other w ords, despite
the conventional wisdom that if one begins with an inventory of a
resource and uses some up, there will be less left, raw materials
have become less scarce. To continue to assert the contrary is to
be unaware of the body of work beginning wi t h Barnett and Morse's
1963 classic Scarcity and Growth. It also ignores a considerable
body of more recent work that reinforces this conclusion, such as
this author's The Ultimate Resource and in the The Resourceful
Earth.5 The evidence shows that, given t ime to adjust to shortages
with known methods and new inventions, free people create addi
tional resources, thereby confuting Malthusian reasoning. The
extraordinary aspect of this process that begins with actual or
perceived shortage due to population or income growth is that it
eventually leaves things better off than if the shortage had never
arisen, thanks to the resulting new techniques A specific example:
plastics began as a substitute for elephant ivory in billiard balls
after tusks began to grow sc a rce. That is why the life
expectancies and the incomes of the people of the world have been
rising along with rising populations, despite the increasing use of
resources. This idea may be mind-boggling, but facts are facts This
assertion has been refuted c omp1,etely by data showing THE WHITE
HOUSE PAPER When a draft paper endorsing the pro-growth,
anti-control position was leaked, former Senators Robert Taft, Jr.,
and Joseph D. Tydings, "both affiliated with the Population Crisis
Committee decried the Whit e House draft in a recent letter saying
that it would represent the adoption of a 'fundamentalist
know-nothing' political philosophy with respect .to population and
development in the less-developed nations. If "know-nothing f David
Morawitz, Twenty-Five Y ears of Economic Development: 1950-1975
Baltimore: Johns Hopkins University Press, 1978).

The Washington Post, June 14, 1984, p. A3. 7 refers to innocence
of the scientific facts, one reply might be that the State
Department position is indeed that, whereas the White House draft
is generally consistent with the available evidence represents a
180-degree reversalll and is Ira potential foreign policy
embarrassment of serious proportions.Il nation with moral
principles continue to promulgate statements contrary to the
scientific evidence just to be consistent? And would it not be e m
barrassing for the U.S. to continue to endorse unfounded policies
ment. Comparison of the data on density and economic growth across
nations reveals that higher density is associated with faster
rather than slower growth. Fly over Hong Kong--a place seemi n gly
without prospects because of insoluble problems a few decades
ago--and you will surely marvel at the astounding collec tion of
modern high-rise apartments and office buildings. Then drive around
on its excellent and smooth-flowing highways for an hour or two,
and you will realize that a very large concentration of human
beings in a very small area does not prevent comfortable existence
and exciting economic expansion, if the economic system gives
individuals the freedom to exercise their talents and to take
advantage of opportunities. And the experience of Singapore makes
clear that Hong Kong is not unique The former Senators also
asserted that the White House'draft But should a great Nor is high
population density a drag upon economic develop Singapore , in
fact, despite its very high density, now suffers from a labor
shortage in the sense that it is bringing in workers from abroad to
fill jobs in construction and elsewhere.

And ironically, after years of the worldls strongest economic I
coercion to indu ce people to have fewer children, Singapore is now
considering giving incentives to middle-class families to have more
children So much for the necessity of population control if a
nation is to have economic development r i I Lest one wonder
whether there is something special about Hong Kong and
Singapore-whether just being Ilcity states" accounts for their
astounding success in the face of high density and rapid population
growth-consider that both have larger populations than many
countries of the world w ith much larger areas. Would there be some
reason to think that Hong Kong and Singapore have an advantage
because they lack larger pieces of sparsely settled real estate
outside their city areas? If so, it is an easy ltadvantagell for
other countries to o b tain i CONCLUS IONS Population increase
creates business opportunities and facil itates change. Larger
populations make investment in expansion Asiaweek, June 22, 1984,
p. 28; Far Eastern Economic Review, June 21, 1984 p. 31. :c a and
new ventures more at t ractive by reducing risk and increasing
demand. Thus there are more job opportunities, more young people
working, and greater mobility within the labor force. Such mobility
enhances the efficient allocation of resources and pro duces the
best match of peo ple to jobs.

But the most important benefit of population growth is the
increase it brings to the stock of useful knowledge. Minds matter
economically as much as, or more than, hands or mouths.

For example, Hans Bethe, winner of the Nobel prize for physic s
in 1967, has said that prospects for energy breakthroughs would be
greater if the population of scientists were larger. Progress is
limited largely by the availability of trained workers. And minds
only arrive in company with bodies human knowledge. And the
ultimate resource--as the White House draft quite correctly
recognizes, and as even the State Department draft concedes-is
skilled, spirited, and hopeful people exerting their wills and
imaginations to provide for themselves and their families, thereb y
inevitably contributing to the benefit of every one. But even the
most skilled persons require an appropriate social and economic
framework to provide incentives for working hard and taking
risks--enabling their talents to flower and come to fruition. Th e
key elements of such a'framework are economic liberty, respect for
property, fair and sensible rules of the market that are enforced
equally for all, and the personal liberty that is particularly
compatible with economic freedom. This the White House dra f t also
recognizes. There is justice here, and wisdom, and the promise of
economic and human development. It is a sound platform upon which
the United States may stand in Mexico City It deserves U.S. support
The main fuel to speed the world's progress is t he stock of Julian
L. Simon Senior Fellow Dr. Simon is a professor of Economics at the
University of Maryland.